--%>
Assignment Help - homework help

Explain Cost of capital aspect

Cost of capital aspect: Estimation of WCR is beneficial from the point of view of cost of capital too. A sound working capital position is beneficial from the point of view of both owners and lenders of the company. A sufficiently positive position means that the firm is able to meet all its short term needs even if they arise quickly. Therefore, the lenders will be secure in this scenario. For the owners, this situation means that the secure short-term lenders will extend them easy credit facilities and higher payment schedules. Thus, the impact on the overall situation will further get negated. The firm will be able to perform with lower cost of capital. Another aspect of large positive working capital is that it will mean lower level of long-term funds involvement thus, reducing the overall cost of capital for the firm. On the other side, if the WCR estimation turns out to be negative the firm will be able to identify the probable threats to its operations from existence of such situation and take corrective actions. This will help to bring down the possibility of any such occurrence and their impact period is minimized to a minimum. Some of the steps could be more lenient. Sales policy which would result in more sales in the market, paying off of unnecessary payables which only result in raising amount of current liabilities a without any productive use.

   Related Questions in Corporate Finance

  • Q : Which data is the most suitable for

    Which data is the most suitable for finding betas?

    		•
  • Q : Sinking Fund problem Berks Corporation

    Berks Corporation is expecting to have EBIT next year of $12 million, with a standard deviation of $6 million. Berks have $30 million in bonds with coupon of 10%, selling at par, which are being retired at the rate of $2 million annually. Berks also have 100,000 share

    		•
  • Q : FIN3000 Corporate Finance Task

    Task Description Length: 1000-2000 words (up to 500 words above 2000 permitted) Description: • Complete this assignment in groups of 4-5 students. • Maintain a portfolio of financial issues taken from 8 news sources. • Analyse the articles with reference to theory covered in class and highlig

    		•
  • Q : Calculate present value of expected

    When valuing the shares of my company, I calculate the present value of the expected cash flows to shareholders moreover I add to the result obtained cash holdings and liquid investment. Is that correct?

    		•
  • Q : Porters Secondary activities Porter's

    Porter's Secondary activities: 1. Procurement: • Identification process of raw material.• Identification process of identifying probable suppliers.• Process of purchasing and calling quotes. 2. Human Resource management:

    		•
  • Q : Explain value of shares is Is this

    Is this correct that the value of the shares is, the “value of the results’ capitalization” that, as per to the Institute of Accounting and Auditing (ICAC) shows “the sum of the expected future results of the company throughout a certain period

    		•
  • Q : How present value of tax shields be

    I have two valuations of the company that we set as an objective. Within one of them, the present value of tax shields (D Kd T) computed using Ku (required return to unlevered equity) and, in one, by using Kd (required return to debt). The second valuation is too high

    		•
  • Q : Do expected equity flows coincide with

    Do expected equity flows coincide along with expected dividends?

    		•
  • Q : Data Case Please assist with the

    Please assist with the attached Data Case assignment

    		•
  • Q : Calculate valuation realized by

    Is a valuation realized through a prestigious investment bank a scientifically approved result that any investor could utilize as a reference?

    		•